Reprinted from June 1999 ABI Journal

Web posted and Copyright © June 1, 1999, American Bankruptcy Institute.

The Senate reform bill (S. 625) may face heated debate when it reaches the Senate floor in June. One flashpoint will be over the disclosures to be required of credit card issuers. Most of these provisions come under the jurisdiction of the Senate Banking Committee, and avoiding a referral to that committee is a goal of prime sponsor Sen. Charles Grassley (R-Ia). Still, the bill has broad bipartisan support and should pass by a comfortable, if not veto-proof, margin. A motion to cut off extended debate may be necessary, with 60 votes needed for passage.

Sen. Dick Durbin (D-IL), along with several other Senate Democrats, has reintroduced last year's Senate-passed reform bill (S. 945). The bill—an alternative to S. 625—allows judges to dismiss or convert consumer cases based on a variety of factors, including the debtor's ability to repay 30 percent of unsecured claims over a three-year plan. The bill also contains numerous credit disclosures and protections against "predatory" lending practices. The bill passed the Senate 97-1 last year, but enjoys little enthusiasm among the consumer credit industry.

The Congressional Budget Office (CBO) estimates that implementing H.R. 833 would cost $333 million over the 2000-2004 period—$322 in discretionary spending subject to appropriations, and $11 million in mandatory spending (mostly for the new judgeships in the bill). CBO estimates the private sector mandates on attorneys (at $150-500 per case) and others to exceed $100 million.

In a May 18 New York Times op-ed, House Judiciary Committee Chair Henry J. Hyde (R-Il) criticized the use of IRS standards in determining allowed expenses under the means test in H.R. 833. Hyde focused in particular on the food allowance as inadequate for families: "Serious problems are evident when a debtor earning $51,000 a year gets $421 per month for food when living alone and $619—less than 50 percent more—when supporting a household of four...I hope Congress will reconsider this humane approach to living expenses."